Lenders continue to support customers through Covid-19

• As the furlough scheme comes to an end on 31 October the banking and finance industry is committed to providing tailored support to customers facing financial difficulty.
• Following the commitment by the industry in March to provide payment deferrals to those customers that needed help, industry figures show that 162,000 mortgage payment deferrals are currently in place, down from a peak of 1.8 million in June.
• A further 97,300 payment deferrals are in place on credit cards and 64,400 on personal loans.
• Initial industry analysis suggests that over three-quarters of customers whose payment deferral has come to an end have now returned to making repayments.

As the furlough scheme and existing support measures come to an end on 31 October 2020, the banking and finance industry has reiterated its commitment to support mortgage, personal loan and credit card customers facing financial difficulty.

In line with the latest guidance for consumers from the Financial Conduct Authority (FCA), lenders will continue to offer a range of options to support borrowers who face financial difficulty. The FCA’s latest customer research also shows that almost a third of adults (31 per cent) have seen a decrease in income, with households seeing income fall by a quarter, on average.

To ensure these households are supported, all lenders will offer tailored options to support customers through payment difficulties resulting from Covid-19, taking into account their personal circumstances including any local restrictions that may be imposed. Support will be available both for those who have previously taken a payment deferral and those who are newly in financial difficulty.

Ongoing support for mortgage customers may include:

• Extending the length of the mortgage term.
• Changing the type of mortgage (e.g. a temporary change to an interest-only mortgage).
• Deferring payment of the interest or the sums due
• Capitalising the interest accrued, i.e. adding the added interest owed to the balance of the loan.

Ongoing support for credit card and personal loan customers may include:

• Accepting reduced payments for a further short period if the customer’s circumstances are expected to improve.
• Accepting reduced payments via a longer-term repayment plan if the customer is experiencing more severe financial difficulties.
• Considering whether the refinancing of the outstanding credit at a sustainably affordable payment rate is an option which will be in the customer’s interests.

Eric Leenders, Managing Director of Personal Finance, UK Finance, said: “The banking and finance industry is providing unprecedented levels of support to help customers through the Covid-19 crisis. We understand that many people’s finances will continue to be impacted by this pandemic and want to reassure them that ongoing help is available, tailored to their individual circumstances.

“It will always be in the best interest of customers to resume making payments on their mortgage, loan or credit card if they’re able to do so.

“However, anyone still experiencing financial difficulty should get in touch as early as possible to discuss the options available, starting by checking their lender’s website which will be updated with the latest information.”

More than 4.4 million payment deferrals have been granted
The support provided by lenders builds on more than six months of help for customers. The latest figures from UK Finance reveal that the number of customers on a payment deferral has significantly decreased in recent months. Of the 4.4 million payment deferrals granted across mortgages, credit cards and personal loans since the start of the pandemic, 323,700 are currently still in place.

Lenders have now provided a total of 2.5 million mortgage payment deferrals since the start of the pandemic. As of 9 October 2020, there were an estimated 162,000 mortgage customers still on a payment deferral, down from a peak of 1.8 million in June. The industry has also provided over 1.13 million payment deferrals on credit cards, of which 97,300 are still in place. Another 793,000 payment deferrals have been provided for personal loans, of which 64,400 are still in force. In addition, over 27 million personal current accounts have had an interest-free buffer applied to their arranged overdraft.

It is always in a customer’s best interest to resume payments if they are able to do so. Evolving industry analysis suggests that over three quarters of mortgage, personal loan and credit card customers whose payment deferral has come to an end have now returned to making repayments.